"Amateur," the unauthorized biography of Obama by Edward Klein, former editor-in-chief of the New York Times magazine, accuses Clinton of branding the current commander-in-chief "incompetent" and saying he "did not know how to be president."
Citing accounts of the purported conversation, Klein writes that the former president urged Hillary Clinton to quit her job as secretary of state and challenge Obama for the Democratic nomination, insisting she'd be better at the job.
A story in Friday's edition of the New York Post laid the book's most controversial passages out in stark detail.
"The economy's a mess; it's dead flat. America has lost its Triple-A rating ... you know better than Obama does," Clinton is quoted as saying during the exchange at the Clinton estate in Chappaqua, N.Y. Close friends of the couple were said to be in attendance.
"The country needs you! The country needs us!"
Hillary Clinton is quoted as replying, "What about loyalty, Bill? What about loyalty?" Her husband's response, according to the book: "Loyalty is a joke; loyalty doesn't exist in politics."
"Why risk everything now?" a skeptical Hillary Clinton is also said to have asked her husband, adding she wanted to leave a strong legacy as a widely respected secretary of state.
"I want my term to be an important one, and running away from it now would leave it as a footnote."
The exchange purportedly remained heated until the couple's daughter Chelsea walked in on the conversation and told her mother she "deserved" to be president.
The knives have come out for Klein in the wake of the allegations, with sources close to the Clintons crying foul. The former president's spokesman trotted out unusually harsh language to discredit the book, set for release on Tuesday.
Quoted in the Post report, Matt McKenna branded Klein a "known liar" and called the book's allegations "totally and completely false."
A previous Klein biography of Hillary Clinton — 2005's "The Truth About Hillary: What She Knew, When She Knew It, and How Far She'll Go to Become President" — angered the Clintons, and came under fire when the author was accused of numerous inaccuracies.
Philippe Reines, a spokesman for the secretary of state, also pointed to questions about the previous book's veracity when asked about "Amateur," a biography that essentially portrays Obama as out of his depth and suffering from a profound messianic complex.
The White House, too, took shots at Klein.
"Nobody in their right mind would believe the nonsense in this one, especially since both Secretary Clinton and President Clinton have been loyal and supportive of the president at every turn," White House spokesman Eric Schultz told the Post.
A Democratic strategist who worked on Hillary Clinton's 2008 campaign said nothing about the allegations rings true.
"There was no way in hell Hillary Clinton, a loyal Democrat her entire career, would ever run a primary against a sitting Democratic president, and there's no way Bill would ever suggest it," said the former campaign worker.
"The conversation, which Klein claims to know word-for-word, is obviously made up. It doesn't help that the dialogue is hackneyed and sounds nothing like real people talking."
Klein, meantime, is firing back at the Clintons and their loyalists.
"You mean Philippe Reines, the spokesman for the Clintons, is calling someone a liar? Is that someone's idea of a joke?" he said in a statement.
"Team Clinton's record on truth has as much credibility as Kim Kardashian talking about marriage. After all, Bill Clinton is the guy who lied about Monica Lewinsky to his cabinet, his daughter, and his wife."
He added that "no one has been able to successfully refute" anything in "The Truth About Hillary."
Clinton and Obama had a strained relationship during the president's bruising primary battle against Hillary Clinton. Once Obama was the nominee, however, Clinton publicly supported his one-time foe.
In recent weeks, the two have joined forces, with Clinton campaigning for the president's re-election. He was even front and centre in a campaign video lauding Obama's cool hand in green-lighting the Navy SEALs raid that killed Osama bin Laden a year ago.
The pair are scheduled to make at least two campaign appearances side-by-side in the weeks to come.